The Dow Jones Industrial Average was up 178 points, or 1.5%, to 12037, the S&P 500 climbed 19.2 points, or 1.5%, to 1298 and the Nasdaq Composite was higher by 48.4 points, or 1.8%, to 2692. The FOX 50 gained 11.9 points to 913.

The Dow, S&P and the Nasdaq are on their best three-day winning streak since September 3, rebounding from steep losses in the beginning of last week. News that the volatile nuclear crisis in Japan stabilized somewhat helped instill a sense of confidence in the markets. Indeed, workers were able to connect external power to two of the stricken reactors, raising hopes that a full meltdown wouldn't take place.

"The situation at the Fukushima Daiichi plant remains very serious, but we have seen signs of improvement," Yukiya Amano, International Atomic Energy Agency Director General, said at a press conference.

AT&T's (T) plans to acquire Deutsche Telekom's T-Mobile USA unit in a $39 billion cash-and-stock deal lifted stocks. The merger, if approved, would create the biggest mobile provider in the U.S. Shares of rival-provider Sprint Nextel (S) plummeted more than 10%.

Also on the mergers and acquisitions front, Charles Schwab(SCHW) is buying Optionsexpess (OXPS) for $17.91 a share, or roughly $1 billion.

Traders weren't deterred by oil prices that soared amid continued instability in North Africa and the Middle East. U.S. and coalition forces slammed Libyan leader Muammar al-Qaddafi's air defenses over the weekend and into Monday, clearing the way for further action, in accordance with the U.N. resolution to protect civilians in the oil-producing country.

The situation in Yemen remained tense after the government violently cracked down on anti-government protesters, killing and injuring civilians, according to media reports.

Light, sweet crude jumped $1.26, or 1.3%, to $102.33 a barrel. The price for a gallon of regular gas was $3.55 on average, up from $3.16 last month and $2.82 last year, according to the AAA Fuel Gauge Report.

Prices have spiked in recent weeks as traders have priced in the risk of volatility spreading to larger oil producers, such as Saudi Arabia.

Sales of previously-occupied homes plunged 9.6% to an annualized rate of 4.88 million in February from January, far weaker than economists' expectations for a drop of 4%. The report by the National Association of Realtors also showed the median home price sinking 5.2% to 156,100 -- the lowest level since April 2002.

"This was a disappointing report, but part of the decline may be attributed to some payback after three months of steady gains," wrote Theresa Chen, an economist at Barclays Capital, in a research note.

Difficult conditions in the mortgage markets are continuing to make it difficult for consumers to make real estate purchases, according to Chen.

In the foreign exchange market, the euro gained 0.2% against the dollar and the greenback climbed 0.25% against the Japanese yen.

Gold recently settled higher by $11.90, or 0.73%, to $1426 a troy ounce.